Nomad Foods Limited (NOMD) Earnings Call Transcript & Summary

Nomad Foods back to the CAGNY Conference. After having successfully navigated unprecedented inflation in its core European markets and protecting its long-term structural margin integrity, the company spent much of last year getting back to supporting its brands with marketing and promotional actions, with the expectation that it could be prepared to enter 2024 in a more sustainable, volume-led way. And the company's announcement yesterday of its plans for '24 would seem to sort of back up that thought process. And recent data does show that volume and market share are responding accordingly, so too as Nomad maintained strong free cash flow, which has led to broader capital allocation with the announcement of a first-time dividend as well as a hefty share repurchase authorization. With us from Nomad today to discuss all of this in more detail are CEO, Stéfan Descheemaeker; and CFO, Samy Zekhout; along with new Head of Investor Relations, Amit Sharma. Stéfan, over to you.

Thank you very much, Andrew. It's nice to be back at CAGNY. It is always a pleasure to come here. So a little bit too short every time, but next time, I'd probably spend a bit more time. So obviously, I will spare you the disclaimer, and I will go right away to the presentation. So before I'm starting with the presentation today, I want to remind everybody of our mission actually as Nomad. So it's serving the world with better food. So you have heard from many of our colleagues in the U.S. over the last 2 or 3 days how important it is to understand how the consumer is moving, and it's moving -- consumer is moving, actually. We're addressing the traditional, let's say, food choices. It's about health concerns, sustainability, affordability and all of these things. And so I can tell you, when I see this, I'm very confident that Nomad Foods is better positioned than most of our peers for the changing consumers. So with that, what we want to do today is really to present things about -- around 3 themes. One is what we are. We are the European's leading pure-play branded frozen food company with a portfolio of fantastic brands. We have the scale that is not matched by our competitors. And as a result, it also enables us to deliver an uninterrupted track record of top-tier financial results amongst our peers. We faced unprecedented macro challenge over the last 2 years, perhaps more than many companies here at the conference, but I can say that we delivered excellent results through this period. And we learned so much. And we have taken this opportunity to position ourselves for accelerated growth as we look ahead to 2024 and beyond. And we are a cash flow machine, which combined with the strength of our balance sheet, the flexibility we have and effective capital allocation, it's positioned us to deliver great shareholders' return as simple as that. So let me start with the first piece, which is attractive segments, frozen food. It's -- and the way we convert this industry, this category into great, obviously, top-tier financial results. So we are one of the very few publicly traded food pure-plays, very few like us. We're leading the revitalization of the frozen food industry since our inception in 2015. And it's working. It's a big industry, EUR 57 billion, still smaller than North America. But very importantly, it has grown since 2021 at a CAGR of 9.5%, which is faster than food overall, faster than perishable, faster than FMCG and largely in line with ambience. Hence when you think about it, it's not difficult to understand why because it's very much in line with what you see on the -- let's say, on the lower level of the slide, which is convenience, taste, nutrition, affordability, sustainability, everything that is important today for the consumers. So the second piece is, as we said, is -- so first piece is it's a great industry. Second is we are one of the largest branded frozen food companies. So these are the numbers in Europe, as you can see, EUR 3.9 billion retail sales. And we've done this through organic growth and also very selected M&A -- a very selective M&A program, very focused around frozen foods. So with that, this is what we are today. So we are the largest savory frozen food portfolio in Europe. We have one of the largest frozen food footprint in Europe, again, 8,000 employees, 18 plants. We generated more than EUR 3 billion of sales last year, more than EUR 530 million of adjusted EBITDA. And that makes us, by far, the largest frozen food company in Europe with, and that's very important as well, #1 share in each of our top 15 markets, and we believe so much in market share. Brands, again, we are relatively young organization, starting in 2015. However, at the same time, we have these brands. You know some. You don't know all the others. Birds Eye, obviously, for U.K., Ireland; iglo for basically German, Netherlands -- Germany, Netherlands, Belgium, Austria; and some of the Findus, north, south; Ledo is a great brand in Serbia and Croatia; Goodfella's in the U.K. So we have all these great brands, all focused on frozen foods. And it's basically high-margin, and it's fast-growing in terms of brands, which is really the foundation of our business. Acquisitions, again, very focused when you think about it, so we've been through 4 to 5 acquisitions, starting with Findus. Then 2 acquisitions in U.K. in 2018, Goodfella's and Aunt Bessie's. Goodfella's is Pizza. The other one is very specific to the U.K., which is Yorkshire pudding. Findus Switzerland, that was the remnants of what Nestlé had. And then acquisition of frozen food and ice cream business in the Adriatic, Serbia, Croatia, Bosnia. So again, very focused, not only in terms of acquisitions but also in terms of integration. We're quite proud of what we have been doing, which is not only acquisition. Acquisition is easy to some extent. Integrating the business the right way is very different. And that's why we're also so focused. So overall, when you see all these years, we've invested around EUR 1.2 billion in acquisitions over the last 5 years and added over EUR 1 billion of sales since our launch. That's a slide I like. I like it, quite frankly. We started in 2015. And when you see our results, well, we've grown revenues by around 60%, adjusted EBITDA by 65%, EPS by more than 90%. When you [ compress ] that in terms of CAGR, 7%, 7%, close to 10% and while absorbing at the same time, EUR 0.17 of interest between '23 and '24. So at the same time, we're also very good at converting this growth. Growth is fine. Uninterrupted growth is even better. But converting this into cash flow is obviously the ultimate. And so we have converted more than 100% of -- in terms of cash flow. And so with that, yes, I think it's not arrogant to say that we are in the top quartile of financial performance amongst peers, but that's the past. So more importantly, we believe these are the right foundations to continue to deliver attractive results in the future. From the past to 2024, which is today. So that's what we've seen from yesterday. So we expect organic net revenue growth of 3% to 5% -- 4%, very importantly, including positive volume growth, and I understand that not all of our peers are coming with that kind of a statement. Adjusted EBITDA, so from 4% to 6%. EPS of EUR 1.75 to EUR 1.80, which is 9% to 12% of growth. So we will obviously provide you more information. That's actually in a week, on February 29. But again, let me reiterate, we expect to return to positive volumes and share growth in 2024. Moving from the past to today, '24 to long term, which is even more important. We think we have what it takes to deliver these results, which is 3% to 4% organic revenue growth, 5% to 7% EBITDA growth, 7% to 9% EPS growth, with 90% to 95% cash conversion. So at or nearly the high end of the long-term outlook for most of our U.S. peers. At the same time, we think we can even amplify besides attractive organic growth with the right effective capital allocation. M&A is obviously not far away. We decided for 2 years to stop it. Now we're going to resume it. And obviously, when the right opportunity is coming, again, focused, we're going to take it. Second takeaway is growth acceleration in 2024. How are we going to do this? So again, let me start with the last 2, 3 years. It's been tough. And well, being a European company, we have more than a fair share of these headwinds. Some people didn't believe that we could make it work. But we learned so much. And some -- like someone said, you never let a good crisis go to waste. And we learned, we learned, we learned from this crisis. And obviously, we have equipped ourselves for accelerated growth for '24 and '25 and beyond. And so I'll tell you exactly how we're doing this. The first piece is how we see, obviously, the volumes in the -- let's say, in terms of volume growth, in terms of, let's say, inflection and the volume share. So as we said, the key priority for us -- one of the key priorities is to deliver positive volume growth in 2024. And so we can see we are on our way to achieve this later this year. So the right from an impressive minus 16% to something which is getting close to 0%. And so it's really a combination of, number one, the category is doing well. Second, obviously, we're lapping obviously, a year ago, pricing, but also, we begin to benefit from our growth initiatives. We started very much -- very clearly, in Q3 -- end of Q3, Q4 in 2023, we really raised the game in terms of A&P. We did a lot of other things in terms of promo, in terms of revenue growth management. So we took a very integrated approach for all our categories or most of our categories, and we're starting to see the results. So that's what we do. What -- the way we do it, obviously, is also not very different from what we did and what was really part of the success of this organization, which is, again, focus. You heard me saying -- using the word focus very much. But we -- since 2015, so those that who know us, we focus on Must Win Battles. Must Win Battles are, for us, in all the countries in Europe, are the markets in the categories where we obviously large -- let's say, a lot of sales but, at the same time, more importantly, growth profile and also, let's say, gross margin. So by definition of strategy, the way you have to allocate your resources, these Must Win Battles are receiving the biggest part of our growth investments. And what I can see right now -- already now is we see -- we give you some examples. We see a positive inflection with those Must Win Battles that have already been through the flywheel. So it's -- again, it's a very clear choice, long-term health, growth potential for brands. We chose, like other people, to preserve our margin structure over the last 2 years. We took a lot of pricing to offset the record-high inflation. We also -- obviously, we know that at the same time, we lost market share and volume. We knew that would happen. But again, with that, we have no regret. We knew that it was the right thing to do to be able, again, at the right time, to reinvest, which is exactly what we're doing right now. So what we're going to do in 2024 and beyond is really 4 things. One is grow the core, and I'll define a bit further what the core is. Focusing on consumer-centric innovation, something that we somehow -- for the last 2 years, was a bit on the back burner. And then invest in growth capability because we had to invest a lot to adapt ourselves to the new situation. And then the way we finance ourselves obviously is [indiscernible]. Now we'll have a word on this as well. So again, grow the core, grow the Must Win Battles. That's one thing. Second thing is -- and that's new for us, is new growth platforms. What does that mean? It means that basically, we have an amazing breadth of product, brands that can be used from one country to another. It's something that nobody has in the frozen food industry in Europe. And so it's easier for us to really lift and shift and move to another country at a lower risk. And that's really something that we're starting to institutionalize within Nomad. We're also investing more behind the capabilities. RGM, revenue growth management, is a big thing. So we have really strong team right now at the center level but also in the region, the clusters, what we call, and it's making a difference. And obviously, we're also investing more and more in terms of A&P, starting in '23, but definitely, we're not going to stop 2023 -- in 2024. And to do this, we're really upping the game in terms of productivity agenda in terms of supply chain, and we can see that we're making really a difference right now. So that's all these things, obviously, as you can see, are centered around growth. So how to, let's say, fuel the investment, how to invest it and then where we're going to invest. So let me start with the core. So how are we doing this? So when we started back in 2016, basically what we came to the conclusion with is we have, let's say, 2/3 of our sales were represented by what we call then the Must Win Battles. But the 2/3 of the sales represented more than 2/3 of the gross profit. And so as a result, we decided to invest much more than the 2/3 behind these Must Win Battles. Unsurprisingly, that's not the whole point. These Must Win Battles have grown to the point that today, they represent 90% of our sales. Therefore, it's time again to refocus. And so that's exactly what we're doing. We're focusing behind the best and the biggest, let's say, Must Win Battles, not just on both sales but also obviously profitable sales. So in this process, we have deemphasized nearly 25% of the previous Must Win Battles and repositioned the rest with obviously more A&P, which, again, as you know, overall, we're reinvesting more but even further behind these categories. So for example, we have around 80 Must Win Battles in -- with the group. For information, the big -- the largest 20 represent around 50% of our sales and, obviously, more than 50% of our profit. And so they will receive, obviously, a biggest -- the biggest part of the whole thing. An example is Italy. We have a big Must Win Battle there, which is fish. So we've been through a real 360 what we need to do to really ramp up innovation to redeliver to -- how to redeliver, let's say, growth behind the category. So we've done that in the last quarter of 2023 and still now obviously, it's a big launch. So we're coming with innovation. We then [indiscernible] We're coming with a really well-thought promotion activation. We're coming with a new advertising campaign with the Captain Findus, and we're also working with Playmobil, for example, as an in-store partnership. So with that in 2 months -- and that's very, let's say, reassuring for us. We've seen that the market share in terms of volume share has increased by 190 basis points just in 2 months -- last 2 months of 2023. So that's an example of the things we're doing with our best and brightest Must Win Battles, which is not only focusing on A&P or focusing on price or promotion or innovation but really to take -- I mean we want to take a global approach. Second thing, as I said, which is a bit new for us, is really cross -- what we call, cross-pollination to expand into new markets and categories. It's a new word for me. And what we've seen is, especially in a country like in the U.K., when we have, let's say, a very large number of -- high number of Must Win Battles, we have obviously, which makes sense, a very high exposure with the consumers. In some of the countries, we don't have that in the same breadth. And so we see that, obviously, the market share is lower, but then there is some sort of, let's say, wasted opportunity. At the same time, we have -- as I said, we have an amazing, let's say, range of products that are working very well in some countries and that are not existent in others. So that's the concept of checking, adapting sometimes and then doing a lift and shift, which is easy to do. It's innovation to some extent. It's commonsensical innovation at a low risk. Good example is something we did -- something like 5 years ago, we started with the fish and chips in the U.K. with very little money, by the way. The concept worked extremely well. We moved from 5 million to 40 million today. And so we're starting now the fish-and-chip concept in countries like Switzerland or like in the Adriatic. And there are many others, let's say, other opportunities. That's something we're really institutionalizing within the group. Consumer-centric innovation. For years, our innovation were representing around 5% of our sales. Then it took a bit of a dip during the cost of living years -- crisis, let's say, 2021 -- or '22, '23. And as a result, like many other people, by the way, innovation took a bit of a dip. Definitely, we think that's the biggest lever for the future for us. We never have expressed it that way, but definitely, it's something that we want to make bigger. We're going to refocus a lot of resources behind it. Our ambition in this year is to go back to 5% and beyond in the coming years. Example of innovation. One is, for example -- so what we're doing is, as you have a set of examples here, is we're refocusing on the consumer more than before, I would say. And definitely, the idea is to come with premiumization, insulation versus private label and, obviously, something that we can then expand from one country to another. Example is, for example, is iglo brand's coated fish fillet to be launched in a few days in Germany. What it is it's quite simple. So normally, you have to go and first -- let's say, you have to go to a frying step, let's say, at the industrial level before going to the consumer. And so what we've been able to do now is to avoid that step through a [ spring ] process. And by doing so, we're doing a lot of things. One is 30% less fat, 30% less expensive from that standpoint. Also, it preserves the taste of the herbs that we're using, which allows us then to go to other -- all the potentialities we have with the concept, and it's more healthy. So it's a win-win from all the angles we can imagine. So more to come, obviously, in the coming months. Second is -- and you may remember, for those that were here last year, with the business we acquired in the Adriatic with -- we acquired an ice cream business. We had a bit of soul-searching exercise. First, was it serving the world with the food. I think, actually, we also love very much the margin. Some might not understand it. And we have this ice cream business, King is a great brand, has won a lot of awards. And this year, they're coming with a sensational big breakthrough in the eat-at-home premium, which is really premium, which is King ice cream top. It's a unique technology. What it allows us to do is to really create layers of different ingredients the way that nobody has been able to do right now, which is very much focused on the consumer. So it's a great example, again, starting right now in the spring, and we know that it's going to be a great success. Impactful advertising and marketing. Again, as we said, we want to -- we are investing more. So double-digit increase in '23 versus '22 and more than that in '24. So we want to regain our top line momentum. A&P is a big part of that, not the only part, but it's a significant part. Same time, interesting to see that 75% of our A&P budget is consumer-facing. So we're increasing the numbers. So all these things are moving in the right direction. More money, more efficient money and also more focus behind what it matters. On top obviously more, obviously, data-driven. We are really upping the game in terms of data so that we can obviously adapt ourselves. And again, when you're in Europe, the game can be very different from countries like Sweden or you're going to Bosnia. So you really have to be nimble and understand the differences. Let's say, the development level is not the same. You're talking about digital. In some countries, it's obviously more than 50%. In some others, it's only 10%. If you just apply the same recipe, it's going to be a disaster. And I think we're doing that reasonably well or more than reasonably well. And obviously, with the -- the data we have on top, we're going to become better and better. So again, thinking about ROI. We know that, again, by investing, and Samy will talk about phoenix, in the program we're putting together, which is to improve the quality of our data and obviously how to use them. Definitely, we know that we're going to improve. We increase not only the quantity but the quality of our, let's say, media definitely focused on digital. Overall, whatever the region is, overall, will be increasing the digital by 40% in 2024, which makes a lot of sense. We're also increasing our presence in the retail media channels to support our in-store activation. And so we have also some great examples of the kind of things we're going to do, for example, also in the summer activation, let's say, program for frozen vegetables. It was a big hit last year. It's going to be a big hit again. It's around barbecue. We activated the program with strong in-store campaign, active advertisements, consumer competition, a lot of things, again, to just demonstrate how seriously we take this flywheel process that we have put together. And it's going to work. It works in some countries last year. It was considered the pilot. And this year, obviously, we're going to extend it to the other countries because we believe that it doesn't have any borders. So with that, here is a video of one of our latest campaigns to highlight on our commissions. It's called master brand. What is really specific, it's a global unified platform, which is not easy when you're dealing with so many countries. But at the same time, we have the flexibility to adapt to any Must Win Battles there is in each and every country when we think it's worth advertising. So with that, let me go to the advertising. [Presentation]

And that's a great segue for Samy.

Thank you, Stéfan, and good afternoon, everyone. I'm delighted to be with you today, and I'm going to take you through the, let's say, the more numerical part and the complementary part to what Stéfan has given you. So I'm going to be focusing on that element relating to the enhancing of the shareholder return. And through a variety of intervention we are doing, I mean, and you've seen, let's say, a number of interventions we've been making, the return back to a winning algorithm. And watching Stéfan's presentation, I really hope that you are as excited as delighted as I am, I mean, to see the growth prospects for Nomad. And we are going to be talking to you about the journey that we are undertaking and how Nomad is positioned to realize these attractive growth prospects. I'm going to briefly discuss the 2023 results, our renewed focus on organic growth and opportunities to execute on the M&A agenda and continued focus on capital allocation through dividends and buybacks to attractive -- to drive attractive shareholder returns. So relating to the 2023 year, we had another year of very good performance as you see. We have completed another year, and we expect to end the 2023 year with revenue in line with our previous guidance of mid-single-digit organic growth with -- while full year adjusted EPS, adjusted capital and adjusted cash flow conversion are expected to be above our previous guidance. If you recall, it was EUR 1.57 to EUR 1.60 on EPS, EUR 250 million in cash and 90% to 95% of free cash flow productivity. Our full year adjusted EBITDA is expected to be modestly above current consensus estimates. And this highlights the very good performance we just completed. I mean we set the bar quite high, started progressively in the year, making some tough calls as we move forward. And this highlights -- these results highlight the resiliency of our business model and our disciplined approach in navigating in a challenging environment for investing in sustained, long-term growth potential while protecting our gross margin and our margins. Now let me talk about the relative performance of our business versus our peer group. 2023 actually continued our positive trends over the last several years. In fact, over the past 5 years, our net sales have increased 7%; our adjusted EBITDA, 7%; and our adjusted EPS at over 6% even as we absorbed nearly EUR 0.17 of incremental interest costs. We have generated strong cash flow during the period -- during this period at nearly 100% conversion rate, all comfortably ahead of our peer group during the period. Our strong top-tier performance is a testament of our strong and resilient business model, as we talked earlier, where we are the market leader in attractive category with iconic brands, a relentless focus on outstanding execution and a highly accretive capital allocation strategy. We are building on this foundation to position us to continuing delivering attractive returns, top and bottom line growth ahead of our peers for the years to come. Now let's talk guidance. Stéfan has alluded to that point, I mean, a bit earlier. And we are very proud, I mean, of the outstanding growth that we have completed over the last 5 years, and we want to continue on this trajectory very clearly as much came against a very challenging macro backdrop, and we expect it to deliver another strong year ahead of us. For 2024, we expect net organic revenue growth of 3% to 4%. EBITDA -- adjusted EBITDA growth of 4% to 6%, even as we increase our A&P support across our biggest Must Win Battles as we talked earlier, and we expect adjusted EPS of EUR 1.75 to EUR 1.80, corresponding to a growth of 9% to 12%, and cash flow conversion still in the range of 90% to 95%. We are well positioned to continue a sequential improvement in our volume and share trends. We started already in the second half of 2023, and this is going to continue in the year of 2024. We expect to deliver organic volume and market share expansion for the full year. I know there are some questions about that, and we'll be able to answer some of your questions. But very clearly, encouragingly, we've seen the trend coming up as we got into the last quarter of the year and as we get into this year. We will provide more detail on that, indeed, I mean, during the 2024 guidance on our fourth quarter earnings next week on the 29th. Let me comment a bit on the flywheel. We've talked about the flywheel for quite a while. The big change that we have been making now is the fact that this is a much more integrated flywheel with a different part coming in sync as we look forward. So the flywheel is at the center of our strategy to generate strong, let's say, shareholder return overall. Let me touch on the 4 stages of our growth in our flywheel. While we have been a very efficient operator in the past, we are increasing our focus on driving greater efficiencies and productivity through our plants, logistics and the entire supply chain. We are investing in data, in technology and capabilities to simplify our operations to unlock additional cost savings. Higher productivity will help us fuel investments in growth opportunities while protecting our margin. We're committed to raising our A&P spending to leverage our strong brands, and at the same time, we are upgrading our revenue growth management toolkit and refocusing on innovation to deliver sustained, attractive organic growth. Brick by brick, we are building on our already-strong platform to deliver more attractive organic growth. Notwithstanding the challenging environment outlined by many of our peers over the last few days, we remain confident of returning to positive volume and share growth in the second half of 2024 as we begin to benefit from many of these investments, and we've seen already some of these signs at the end of last year and getting into the beginning of this year. And finally, we are proud of our ability to preserve our margin through a tough environment. Volume-led top line growth should lead the favorable operating leverage to scale to support our margin structure to deliver growth ahead of our top line. Our impressive track record gives us confidence that we can further amplify attractive organic growth through high ROI capital allocation, including accretive acquisition and cash return to shareholders through opportunistic buyback and annually instituted quarterly dividend. Stéfan touched on the growth aspect of the flywheel. Let me take a few minutes to highlight our productivity agenda and our accretive capital allocation. We have been a lean operator with an efficient supply chain in the past, and we continue to be. As we accelerate our investments in our growth capabilities, Stéfan has mentioned effective investments we are making in the project phoenix, which is our data analytics and modeling capabilities, to standardize, simplify our processes that is going to serve all of the areas of our businesses. We focus on driving continued productivity and efficiency initiatives across the enterprise. Building on existing capability, we are strengthening our strong pipeline of savings that spans across our entire business, enabled by the new shared service I've just mentioned. For instance, let me take an example. We are simplifying our supply chain and instituting uniform KPIs and benchmark across our plant footprint and to enhance operation and throughput and reduce costs. We are now able to compare each and every plant with the same level of requirement and standardization across the plant that has enabled us to do cross-fertilization, cross-learning across the different manufacturing sites. And that enabled us to always try for the better, and we're taking learning from one site to another. We are better leveraging our scale as Europe's largest frozen food company to drive down procurement and logistic costs. Our strong productivity and expanded cost saving program will help fuel our investments as well as position us to deliver EBITDA growth ahead of our top line in 2024 and for the years to come. Let me talk about capital allocation and the intervention we've been making. Stéfan has mentioned the point that we've been a cash machine, and we intend to be. We have delivered strong free cash flow generation, and it has been a defining characteristic of our company. And our ability to sustain strong cash flow conversion has been at the heart of it, even as we invest behind growth, and it's been a key enabler of our success. We have generated EUR 1.3 billion -- over EUR 1.3 billion of -- EUR 1.3 billion of free cash flow over the last 5 years. And this gives us actually the balance sheet flexibility to optimize capital allocation and maximize shareholder returns. As we have done consistently, we view our capital allocation decision through rigorous ROI lens. We have 3 key priorities. The first one is cash return to shareholders. We are proud to institute a quarterly dividend and remain committed to be opportunistic buyer of our shares with EUR 1 billion in buybacks over the last 5 years. Second element is M&A. We have a proven track record of accretive value-generating acquisition underpinned by best-in-class integration expertise. We have been ahead of all of our economics -- target economics of all of the M&A deals we've made. We have a very clearly stated strategy, and we clearly leverage all of the synergy we have in the portfolio to maximize the return that we make on this M&A intervention. The last leg and not the least is invest in our business, to invest in CapEx and other capabilities to position us for stronger organic growth in our assets, in our physical assets and in the rest of the capabilities we have across the organization. We have no debt maturity until 2028 and remain committed to maintaining our net debt leverage in the range of 2.5 to 3.5 range. We will pay out our first quarterly cash dividend in just a few days. That's great news. It's an important milestone for us indeed. It reflects our conviction in the resilience of our business and our confidence in our long-term growth and our ability to generate strong, consistent cash flows. The initiation of a dividend and a very competitive dividend yield relative to our peers highlights our commitment to provide consistent compelling value to our shareholders. And at the same time, the current dividend imply only 35% payout ratio, well below our peers, which signals that we will continue to have the flexibility and optionality to execute on the accretive capital deployment that I just mentioned. Let me wrap up by highlighted -- highlighting that we have delivered industry-leading top and bottom line growth since in our inception. As we look ahead, we expect to deliver 3% to 5% (sic) [ 3% to 4% ] organic sales growth, leading to 5% to 7% EBITDA growth and 7% to 9% EPS growth. That's the algorithm that we have deployed in the past and we continue to deploy in an even stronger way as we look forward. We expect to convert 90% to 95% of net income into free cash flow to support our quarterly dividend and pursue other high ROI capital allocation. And yet, our valuation discount to our U.S. peer has increased to record high levels, as you see on the bottom part of the slide, which I believe positions us very well to deliver strong shareholder return for years to come. And with that, let me hand it over to Stéfan for closing comments.

Thank you, Samy. And as you can imagine, I love the upper side of the slide, a bit less the lower side, I must admit. But everything at a time. So objective is to deliver, keep delivering, delivering again. So with that, we've dealt with more than our fair share of both macro challenge over the last 2, 3 years between the remnants of Brexit, Ukraine-Russian war, COVID, unprecedented shocks to our supply, as you know, record-high inflation, ForEx everything at the same time. So at the same time, we have delivered a top-tier financial performance over the last 5, 6, 7, 8 years. But that's the past, and I'm more -- even more than excited and confident for the future because this is a strong foundation. As we mentioned, we also have what it takes to keep delivering the same way. So with today, I think what we'd like to do is to -- that you keep in mind 3 key things. One is we are a resilient company with a portfolio of great brands; leading market share in attractive categories, frozen food and ice cream; and an uninterrupted track record of consistent top-tier financial performance, uninterrupted. Second, we're building for the long term. And after tough years of tough macro environment, we're ready to deliver accelerated organic growth in 2024 and beyond, volume-led. And we are maniacally focused on shareholder value creation. We have the strong cash flows and balance sheet to not only support attractive organic growth but also amplify with a proven track record of successive M&A by being focused. So more than anything, I just want to reiterate that we believe that Nomad Food is a compelling investment opportunity, and I'm leaving you with that slide from Samy. Thank you very much. Andrew?

Thanks very much. Stéfan, you're one of the few food companies that we've heard from here or lately that's committing to positive volume growth or return to positive volume growth in '24. I think you also mentioned that you would expect that to turn positive in the second half of the year. I know you'll get into more of this probably in detail next week, but I guess what gives you that level of confidence and visibility to commit to positive volume growth for the full year, even though it's going to be -- the growth will come from a little bit more of a back half-weighted perspective?

Well, it's starting, which is not a surprise. Andrew, it's starting with the quality of the category. You've seen it's growing nicely. It's a very resilient category. It's in terms of affordability, in terms of sustainability, in terms of health, and people are recognizing this. And I think we need more and more to leverage this. At the same time, and we started already in 2023, we're launching again. We're back on track with A&P, probably ahead of many people, and we keep it that way. And on top of that, we also, obviously -- we're using the full flywheel. The example of Italy is a great examples -- or a great example how you [ fast ] once you are disciplined with the full 360 approach, how you can do this. And we're going to do this Must Win Battle after Must Win Battle. So that's the bulk of the reason why we think we're going that way on top of as you've seen the direction of what we're already taking between, let's say, the beginning of '23 and when -- how we're ending the year. Anything else, Samy?

I think that the element that is really -- that's giving us the confidence is, first and foremost, it works. We see that already. Andy, we'll talk more later when we really get into the results. Month by month, we see a sequential improvement there. The second point, I think I just wanted to highlight on to Stéfan's point is the flywheel, we've done in the past. But we've done it sequentially or separately. We focused on A&P. We focused on sales. We focused on innovation. Now we're integrating the different parts. I mean, together, very clear, we are making appropriate intervention from a revenue growth management. We are upping the A&P significantly. We've already started that in the second half of the year. At the same time, we are driving efficiencies, and we're investing back in retail and all of that at the same time. So that coordinated approach is giving us much more horsepower. And let's face the point that the fact that we have been increasing prices significantly in the past to recover inflation. And now that we have the right cost structure, we're really able to fuel all of the different vectors to get us there. So as I said, I think that's something we really look at very, very carefully. And we need that growth, and that growth is supported by evidence already in [ O&D ], and that is starting to spill over in the beginning of this year as well.

Rob?

Rob Dickerson, Jefferies. This slide here, just in terms of the guidance, long-term, attractive organic growth potential, 3% to 4%. I know for some time, right, the guidance was always low single digit. When you speak to the flywheel now when you think of the 3% to 4% relative to what you used to guide to, would you say there are elements of, let's say, what you've learned maybe over the past few years? And then what you're implementing with respect to a more integrated approach that just give you confidence to 3% to 4% relative to maybe being a bit more careful in saying maybe it's low single digit or 2% to 3%, like why 3% to 4%?

I can start. I mean, Stéfan, please comment. I think the big change, I think, Rob, is the fact that if you look back in our history, we had a pretty good sales performance, but the fair amount has come through pricing, with volume marginally down. That has been more or less the beginning. We have had a volume growth year back in COVID days. And since then, they're actually very either flat or slightly declining. The efforts we are putting in place right now is we clearly are focusing more than ever on the consumer. We clearly need to regain some of the consumers that clearly have experienced either the brand or other variants type of product and gain more through more moments, more product, more category, more winning product. And so that appeal on volume is definitely going to be a new contributor that is giving us more confidence on the fact that after those 2 years of volume decline, we now have evidence that by putting the efforts we are putting, let's face the situation as we substantially increased our A&P in the second half of the year, which has enabled us to test the robustness of can we get this volume extra. And as we get into this quarter, we're seeing the continuation of that. And effectively, we are committing on to this turnaround in volume -- in positive volume as we get into the year because of the focus on the consumer. And we are doing that with a mindset of profitable volume growth, if you want. So the big change in the past was that those 2% to 3% that you may have seen was primarily probably 3% or 4% in pricing and maybe a minus 1% in volume. And now it's a more balanced element that we see over there with a stronger focus on volume growth enhanced by appropriate, if you want, net sales per kilo improvement through RGM, through new launches and through pricing whenever necessary.

Okay. We've got time for one more in here, if there is. Just one last. All right. Yes, right up here, Steve.

Steve Powers, Deutsche Bank. So this whole presentation, it seems like a return to welcome normalcy, which is great. I guess pick up -- from an M&A perspective, as you now lean back into M&A, which seems like part of your initiative, is there anything different in your approach or your prioritization as you go forward from here versus what you were even focused on before?

The answer is no, simple as that. We think what we're developing is by being focused behind frozen food -- well, everybody knows in Europe that if they want to sell their frozen food business, especially in brand, they have to come to us. So that's the first piece. So you don't have much many competitors. So in terms of price, I think it will have an impact compared to the private equity and all these guys because, well, let's say, you don't have that many people like us. The second piece is learning through all the acquisitions, and we're becoming better and better. I can tell you the latest acquisition in the Adriatic, we put a lot of effort in terms of we had an integration team for some more than 1 year, fully dedicated the whole thing. We've learned so much. And so not only we think we are the only one or almost the only one able to do these deals, second, we also know how to obviously reduce the multiple eventually paid by more synergies. And synergies can be -- cost synergy is usual one that's [indiscernible]. You don't need to be a genius to do this. With cost -- let's say, revenue synergies. And the other way around, by the way, because sometimes you're also learning from these guys. And I think we have the humility to not only to impose our model, but oh, my God, these guys are very smart. So it's something that we should take on board for the rest of Nomad. I think that we have inherently -- within Nomad, we have this ability to not only to have the ambition but also to have the humility to understand from the others what we can do. And it works extremely well in M&A.

Perfect. With that, please join us next door in the breakout, and thank you again for Nomad for being here.